The recently released 2021 Global Real Estate Sustainability Benchmark scores showed an overall improvement in ESG efforts by U.S. equity real estate investment trusts.
Global Real Estate Sustainability Benchmark, or GRESB, scores capture information on ESG performance and sustainability best practices for real estate companies, covering more than 1,200 property companies, REITs, funds and property developers worldwide. Looking at the U.S. REITs that trade on the NYSE, Nasdaq or NYSE American, 53 participated with GRESB in 2021 and received a GRESB Participant Score evaluating their ESG efforts. Additionally, GRESB rated the public ESG disclosure for 142 of the U.S. REITs, expressed through an A to E sliding scale.
GRESB participants are scored out of a maximum of 100 points, with 70 points stemming from a performance component that evaluates aspects such as energy consumption, greenhouse gas emissions, water and waste management and others. The remaining 30 points are scored based on the company's management, taking into account leadership, policies, reporting, risk management and stakeholder engagement.
GRESB also takes into account characteristics unique to different property types.
Of the 53 U.S. REITs scored by GRESB, 38 were assigned a positive score trend in regards to their 2021 GRESB Participant Score, while 14 had stable scores and only one REIT was assigned a decrease compared to the year prior.
By property sector, 10 of the 14 scored office REITs saw a positive increase in their GRESB Participant Score for 2021. Similarly, five of the seven scored shopping center REITs and five of the six scored healthcare REITs scored annual increases.
On the other hand, regional mall REIT Macerich Co. was the sole scored REIT to receive a decreased score trend in 2021. Despite its lower score compared to the year prior, Macerich remained the 10th highest-scored REIT overall with a GRESB Participant Score of 86.7, the highest score for any retail REIT.
Shopping center REIT Regency Centers Corp. recorded the largest increase in its GRESB Participant Score in 2021 compared to 2020, up 17.9 points to 77.5. Mall REIT Simon Property Group Inc. followed, up 16.6 points to 80.0, while self-storage REIT CubeSmart and office-focused Equity Commonwealth both logged 14.7 point increases.
Overall, office REITs that participated with GRESB for 2021 received the highest GRESB Participant Scores, at a median of 87.6%.
Among the ten highest scored REITs, seven were from the office sector. Kilroy Realty Corp. received the highest GRESB Participant Score for 2021, at 94.8, followed by Vornado Realty Trust and Hudson Pacific Properties Inc. with scores of 93.9 and 93.8, respectively. Other office REITs ranking in the top 10 included Empire State Realty Trust Inc., Boston Properties Inc., Paramount Group Inc. and SL Green Realty Corp.
Diversified JBG Smith Properties was also among the top 10, scoring 89.7.
Digital Realty Trust Inc., the sole data center REIT to participate with GRESB for 2021, received a participant score of 87.6, landing it in the No. 9 spot.
On the other hand, four industrial-focused REITs were scored on the lower-end by GRESB in 2021.
First Industrial Realty Trust Inc. scored a GRESB Participant Score of 30.3 for 2021, the lowest of the publicly traded REIT participants. Terreno Realty Corp. and Rexford Industrial Realty Inc. followed next with scores of 35.1 and 36.6, respectively, while PS Business Parks Inc. was scored at 41.2.
